Share

Charity investors must keep calm, warn fund managers

Charity investors must keep calm, warn fund managers
News

Charity investors must keep calm, warn fund managers

Finance | Gareth Jones | 15 Aug 2011

Charity investors should not make any knee-jerk reactions to recent market volatility, fund managers have advised.

Speaking to civilsociety.co.uk, John Kelly, head of client investment at CCLA, said his clients have not been panicking, which is sensible as equities should still provide value over the long-term.

He said that recent events have not been a justification for the market turmoil, and could be partially put down to a low volume of trading over the summer period.

“When the cat’s away, the traders are getting up to mischief, but that shouldn’t be a distraction against anyone thinking about the long-term.
 
“UK equity market yields of 3.7 per cent are ridiculously good value at these levels, companies have got powerful balance sheets, dividends are growing again, profit growth is going to be positive this year and next, half the world economy isn’t impacted by the debt crisis, and the Chinese economy is growing by 8 per cent or so.”

Meanwhile, Kate Rogers, client director at Schroders, said some charities are concerned that inflation is causing them to lose out on their cash investments, but added that trustees should be careful about upping the risk-level of their portfolios.

“I think the difficult decision at the moment is how much you risk and how much you keep in cash even though the rates are terribly low.

“We would still say, particularly at the moment when markets are volatile, that it should be long-term money for equities, not a short-term trade.

“You need a three-to-five-year time-horizon to be investing in these volatile asset classes.”

“Avoid bonds and UK equities”

Kelly adds that the asset classes charities should be wary of are government bonds, which are in a “spectacular bubble” at the moment, and UK equity.

“This year the biggest change has been to increase significantly the overseas element of our equity portfolio, and that reflects mainly the view that the path the poor old UK is going to have to climb up is steeper and rockier even that we thought a year ago.”

Rogers concludes that markets will be turbulent for some time yet. “It’s not just about fundamentals, it’s not just about valuations, it’s politics.

“Equity analysts are having to turn into political analysts. A lot is being decided behind closed doors, whether it be eurozone political wrangling or UK political wrangling over deficit cuts.

“That’s the difficult thing, and what markets hate most is uncertainty.”

Comments

[Cancel] | Reply to:

Close »

Community Standards

The civilsociety.co.uk community and comments board is intended as a platform for informed and civilised debate.

We hope to encourage a broad range of views, however, there are standards that we expect commentators to uphold. We reserve the right to delete or amend any comments that do not adhere to these standards.

We welcome:

  • Robust but respectful debate
  • Strongly held opinions
  • Intelligent relevant discussion
  • The sharing of relevant experiences
  • New participants

We will not publish:

  • Rude, threatening, offensive, obscene or abusive language, or links to such material
  • Links to commercial organisations or spam postings. The comments board is not an advertising platform
  • The posting of contact details for yourself or others
  • Comments intended for malicious purpose or mindless abuse
  • Comments purporting to be from another person or organisation under false pretences
  • Gratuitous criticism, commentary or self-promotion
  • Any material which breaches copyright or privacy laws, or could be considered libellous
  • The use of the comments board for the pursuit or extension of personal disputes

Be aware:

  • Views expressed on the comments board are left at users’ discretion and are in no way views held or supported by Civil Society Media
  • Comments left by others may not be accurate, do not rely on them as fact
  • You may be misunderstood - sarcasm and humour can easily be taken out of context, try to be clear

Please:

  • Enjoy the opportunity to express your opinion and respect the right of others to express theirs
  • Confine your remarks to issues rather than personalities

Together we can keep our community a polite, respectful and intelligent platform for discussion.

Tags

Free eNews

Charities 'must continue to fight for the right to influence policy'

20 Oct 2014

Civil society organisations must not give up the fight to influence policy and governments, the international...

Islamic Relief Worldwide income falls by £18m

20 Oct 2014

Islamic Relief Worldwide has seen its income drop from £100m in 2012 to £82m in 2013, according to...

Charity criticised after refusing to pay Ashya King’s parents' legal fees

17 Oct 2014

Kids 'n' Cancer UK has been criticised for saying it will not pay the legal fees of the family of Ashya...

Voluntary sector sees “revolving door” of staff, says report

20 Oct 2014

The voluntary sector is experiencing a “revolving door” of staff with employee turnover levels at...

Charities 'must continue to fight for the right to influence policy'

20 Oct 2014

Civil society organisations must not give up the fight to influence policy and governments, the international...

Paul Farmer appointed chair of Acevo

17 Oct 2014

Paul Farmer, chief executive of Mind, has been appointed the chair of the Association of Chief Executives...

Blackbaud launches online giving platform for individual fundraisers

17 Oct 2014

Blackbaud has launched its online giving platform, everydayhero, for fundraisers in the UK in a bid to...

Don't dismiss social media 'slacktivists', fundraisers told at IFC

16 Oct 2014

Charities should embrace and love charity ‘slacktivists’ because social is a great ramp for new donors,...

Nesta has made no grants to charities from its Impact Investments Fund

16 Oct 2014

Only 15 per cent of applications to a Nesta fund to invest in innovations to help older people, children...

Join the discussion

 Twitter button

@CSFinance